<B>Data Debated</B>
<I>CTW Sparked Dialogue On Economy, Privacy</I>
<I>New York - </I>Concerns about data ownership capped off a Corporate Travel World conference and exhibition abuzz with talk about the changing economy here last month.
"Who owns the data, how should it be formatted and how should it be protected?" asked National Business Travel Association president Cyndi Perper, global travel manager for Invensys, at a closing session involving many of BTN's 25 most influential industry executives of 2000. The ensuing discussion revealed how divided corporate travel managers are, and prompted the Airlines Reporting Corp. to announce plans for a related product. ARC director of accreditation and database management Barry Lemley said ARC's airline owners last year agreed to fund a data warehousing project. He suggested that CTW participants "stay tuned" for an announcement in the third or fourth quarter.
Meanwhile, The Prism Group president Michael Whitesage said that by the end of spring, clients will begin receiving flown data as a result of his controversial project with Continental Airlines (BTN, Feb. 26). Continental is preparing to add flexibility to its program, perhaps by naming alternatives to Prism.
"Continental is not unique, all carriers have required data," said Kevin Austin, president of Hi-Mark Software. "The main reason Continental went this way was to have standardized data without variables. We've talked to a lot of carriers on this and the concerns of privacy and confidentiality can be addressed." Hi-Mark is developing encryption tools that will hide private or confidential information (BTN, March 26).
In an earlier session, Marian Shapiro, manager of travel services at Ingersoll-Rand in Huntersville, N.C., said she has no concerns over the level of detail requested, but wonders why the process must be replicated for a client already using a third party for data warehousing. "Continental needs to know what clients are doing and I am not totally against it," she said. "However, there needs to be more flexibility on their side." Northwest Airlines sales manager Phil Stumpf said carriers need to outsource this type of data collection. "Airlines are not in that business, they run airlines. Continental was looking to lower costs," he said.<CENTER>
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GetThere has begun beta testing non-GDS bookings as part of the GetThere Marketplace (BTN, June 12) with a number of clients. New Haven-based Rho Moskow, director of strategic procurement systems for SBC Communications, in a seminar on automated booking said her company is using the Marketplace to book directly with Budget Rent A Car and is planning to set up the same with American Airlines. The company also allows travelers to link from its intranet to Swabiz, Southwest Airlines' site, which allows companies to track their spending.
After piloting GetThere beginning last year, SBC now has 50 percent usage of the system, 90 percent of which is for domestic travel. Eighty percent of online bookings are agentless, said Moskow, and SBC pays fees to American Express in three tiers; offline transactions are nearly twice the price of those online. SBC is using American Express' low-cost fulfillment center in Miami.
Other panelists revealed a variety of reasons for selecting a particular vendor. Broomfield, Colo.-based Ball Corp.'s Jan Lykins said her company chose ResAssist mainly because it was promoted by its agency, WorldTravel BTI. But Marianne Goodman, manager of travel and purchasing at Keane Inc. in Boston, said, "I was asked by our CIO to lean toward Oracle's E-Travel," because of integration with other company systems also provided by Oracle. Citing the importance of integration with both agency and enterprisewide systems, moderator Norm Rose, principal of Travel Technology Consulting in Belmont, Calif., said, "There's no question that this is how travel will be booked--everyone will have a self-booking tool."<CENTER>
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The shaky economy was on attendees' minds. Several travel managers suggested strategies to tighten travel budgets, including stricter non-reimbursement and pre-trip approval policies. Combining multiple overseas trips also was cited. "It's amazingly cheap to fly through another country into your own," said one Corporate Travel 100 buyer.
UBS Warburg airline analyst Sam Buttrick, who told buyers that two-thirds of the airlines' passenger revenue base comes from corporate activity, said this downturn is different than a decade ago in terms of corporate travel. "Bandwidth has allowed Webcasting to emerge as a superior substitute for marginal forms of travel, particularly in the past eight months," he said. "2001 may be the year that corporations have the tools to fight back and gain some leverage with airline partners."
Major carriers represented at Corporate Travel World confirmed the weakening of business traffic and said the situation likely would get worse before it gets better. Anecdotes heard on the tradeshow floor: Continental Airlines acknowledged that premium bookings to certain destinations have declined, including Amsterdam, Brussels and Zurich; America West Airlines said it recently has seen many corporations take a closer look at their finances and restrict the number of preferred airline relationships; LanChile, though experiencing recent growth in business traffic, also acknowledged that business traffic could start to slide.
Low-fare carriers, as expected, have not been impacted as heavily and, in fact, have shown some growth as corporations increasingly opt for cheaper fares. Air Tran Airways' director of sales Bill Howard said early 2001 figures have shown record load factors in business class and more than 2,200 enrollments in the carrier's corporate travel program (BTN, Oct. 2, 2000). He added that the business/leisure mix in the past few months has been 60/40, a reversal from where it was a year ago, and that three sales managers will be added to handle corporate interest. <CENTER>
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UBS Warburg analyst Sam Buttrick, joining an airline benchmarking discussion exclusively for CT 100 buyers, expressed surprise at how little incentive there is at the individual level to book cheaper fares. "You want people to spend money as if it were their own, and you need an incentive to push that," he said. A few buyers explained their incentive programs, including upgrades and even free roundtrip tickets for particularly cost-conscious employees. The discussion then turned to leakage problems--travelers finding a cheaper fare on the Internet and booking outside of policy. To prevent such noncompliance and protect the integrity of negotiated agreements, one travel buyer said her company details the benefits of compliance on a Web site and routinely sends division heads lists of noncompliant travelers.
Meanwhile, many CT100 buyers expect the trend toward city-pair-specific flat fares to accelerate, especially with international carriers with whom net-nets are difficult to achieve. Said one buyer, "Flat fares may not have savings in year one, but in years two and three, the savings start to add up as published fares increase." However, several travel managers pointed out challenges with flat fares, including potentially higher agency error ratios and difficulties in coordinating with online booking systems. <CENTER>
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Delta Air Lines ran demos of an area of its Web site enabling direct access to negotiated fares (BTN, Jan. 29). Delta said interested corporations could be up and running in as few as five days. Enhancements in the works include the ability to integrate specific corporate policy parameters, streamlined processes for identifying corporate travelers and hotel and car rental booking capabilities. Delta acknowledged that enrollment has been low, but said the system is most suitable as a niche product for simple roundtrips, such as shuttle routes, where negotiated rates always are lower than any other fares. Buyers also expressed concern that there is no way to safeguard against travelers accessing the site to book personal travel. In response, Delta said potential abuse by travelers would be no different than picking up the phone to book personal trips through the agency. <CENTER>
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"Size is not necessarily the key ingredient in airline negotiating," said Mark Walton, principal at Consulting Strategies in Rolling Meadow, Ill., and moderator of Art of the Airline Deal. "Geography, fortress hubs and domestic/international splits, for example, all are important to the airlines, so a $2 million account may be just as important to them as a $200 million account."
Phil Stumpf, manager of national and corporate sales for Northwest Airlines, said relationships can make or break deals. "You may need to change players, on both sides, if trust isn't possible," he said.
Loretta Larkey, corporate travel manager at Engelhard Corp. in Iselin, N.J., said, "By changing the GDS, we received financial reward from our preferred carrier and improved our position with all three carriers connected with World
span." Engelhard late last month fired up Worldspan's TripManager for 1,000 users, including templates for simple but repetitive itineraries.
The panelists also spelled out some of the pros and cons of global contracting, noting that alliance agreements can facilitate those efforts but a corporation's own disparate data collection systems spread across multiple international locations can slow the process. <CENTER>
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Traci Egermayer, manager of the corporate hotel program at KPMG, kicked off a session on Streamlining the Hotel RFP Process, by sharing the advantages of the NBTA modular hotel RFP, which was introduced in February (BTN, Feb. 26).
Fran Linton, director of corporate travel of North America at Starwood Hotels & Resorts Worldwide, said, "The proposal process is too arduous, but the NBTA standard year over year allows the process to improve. If the standard is adhered to, it does speed up response time."
Lori Scheibelhut, product director for Lanyon, said, "It is important to be very clear about expectations. You need to be clear what type of file you want: an ASCII-delineated file or a Word file."
Erin Wilson, vice president of global travel at Credit Suisse First Boston, said CSFB will look into using the NBTA form in the future. "Our goal is to have the RFP feed into our own intranet with all of preferred vendors and policy."
Kevin Maguire, manager of corporate travel at Tokyo Electron America in Austin, Texas, said it is essential to have accurate data prior to sending out an RFP. "Most travel buyers don't have adequate data. They might have top 10, top 25 hotel cities, but it's not correct data from travel management companies." Maguire suggested that travel managers go directly to a hotel to match data against travel management company data. "We went to different hotel properties and asked them to submit information. It was almost 40 percent different from what the travel management company showed."<CENTER>
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While travel managers fear strategic sourcing initiatives may affect their job security, Connie Cirillo Freeman, director of corporate procurement and travel services for Pitney Bowes, said that a strategic sourcing initiative resulted in her being promoted and taking over corporate procurement. "Travel managers use procurement skills all the time that lend themselves perfectly to procurement of any indirect purchases," said Freeman in a session on Strategic Sourcing and Travel. Freeman said objectivity is critical, but the hardest thing is not to go in with preconceived ideas. Freeman suggested creating a team with varied backgrounds and points of view.
Dan Pirnat, director of client services for Travel Analytics, said one of the upsides of a strategic sourcing initiative is that it can result in newfound management support. "Since it is often one of the first areas sourced, management is looking to make an example. It is a great opportunity to institute changes in policy or preferred carriers," he said.
Georgina Smith, vice president of travel for Cablevision, said, "It is really about selling your program to gain acceptance and having management support behind it," said Smith. "If I didn't have top management supporting it, it would be an uphill swim."<CENTER>
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The heads of the three largest business travel agencies discussed, among other topics, the economic downturn, globalization, strategic sourcing and how they relate to their business.
Commenting on the clear slowdown of the U.S. economy, Ed Gilligan, group president American Express corporate services, said, "The leading indicator is business travel, or the lack thereof. The airlines are losing business travel and feeling real pressure. The first thing companies do is cut back on travel. This is just the beginning of a much slower growth period." Nonetheless, Gilligan said it is an opportunity for corporations and travel management companies to focus on providing world-class expense management.
Hervé Gourio, president and CEO of Carlson Wagonlit Travel, added that it is a time of real potential for travel management companies to grow in expanding markets that have been lagging behind the United States. Gourio said Carlson Wagonlit is expanding its business globally, with subsidiaries in 41 countries and a joint venture inked last year with Japan Travel Bureau. Gourio said few customers now are operating on a global basis. "They are consolidating more regionally, but it is slow. There is a lack of drive," said Gourio.
Jack Alexander, CEO of WorldTravel BTI, said last year was a big year for global expansion as it finalized its ownership structure with BTI. "We set up globally in three regions, worked on the consolidation of accounts within regions and introduced a flat structure that is very responsive to client needs," said Alexander.
Gilligan said American Express in the past six months has become more international in scope. "Globalizing is a journey, not a final destination where one day we can say we are global," said Gilligan. "We were not fully ready to be global, and it was the same with our customers. Now companies have crossed that line and we can implement them from a single place." Gilligan said Amex now is seeing smaller companies starting to develop and roll out global policies as well as larger companies. He said travel management in most companies has received increased focus over the past five years as travel and purchasing become more blended. "From a CFO's point of view, travel managers are saving the company money and are in a higher position of focus," said Gilligan.
"There is a lot of potential for travel management right now," said Gourio. "There is more CEO/CFO involvement with managing travel and purchasing."
"There is a trend toward purchasing becoming more involved and I see that relationship with time becoming more important," said Alexander. "We're seeing five to six clients go through strategic sourcings each year. It is not the happiest phone call we receive, but we try to work closely with them through it."<CENTER>
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Travel managers and technology developers debated the very definition and efficacy of today's handhelds for business travelers, but agreed that the technology, if standardized and simplified, could be of immense use to business travelers.
"To define a Palm is difficult these days," said Gary Amstutz, president and CEO of Walletware, a company that produces an expense reporting application for Palm and other handheld devices. Amstutz suggested the division between the handheld and the laptop will become blurred as the industry integrates more and more functions into these devices. He cited the concept of handheld, credit card-less transactions--currently under development by Walletware--that would produce virtual receipts for on-the-road transactions, including taxi and gas charges. With these capabilities, a three-day turnaround for travel expense reimbursement would be realistic and achievable, he added.
Ideally, one single device would serve business travelers' needs for booking and communication, said Christopher Staal, director of corporate travel for Thomson Corp. Amstutz said this device could provide videophone capabilities to suit meeting needs.
Vickie Smith, manager of global travel and meeting services for Palm Inc., said her employees were traditionally and understandably ahead of the curve. Palm's travelers currently file expense reports, list meeting itineraries, find campus buildings and phone directories over Palm devices.
John Pollard, director of business travel for Expedia Inc., said the online travel agency has gotten a sense of the wireless application market as it exists now with the debut of its Expedia To Go Version 1.1, which is compatible with both WAP-enabled phones and wireless handhelds. With early use on the Palm devices at about 200,000 daily, travelers feel that operation is still too difficult and slow, he said. The company is pursuing the business traveler, an estimated one-fourth of Expedia.com's 8 million in monthly traffic. Pollard cited capabilities around the corner, such as voice usage, wireless checkin and notification. The company has not yet planned rebooking features due to still-thorny issues of refundability with the airlines and hotels. Other issues that continue to plague the technology include privacy--that is, the technology reporting the location of the employee, bandwidth, and of course, revenue, he said.<CENTER>
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Panelists addressed the dimensions of savvy and self-knowledge that modern corporations need to navigate the issue of fee structures in Fee for All--Life After Profit Centers. The first step in the construction of a pricing model, said Kathleen Kaden-Reven, director of travel services for the Interpublic Group of Cos., is understanding your company's culture, priorities and the overall industry's unique aspects.
Wendy Gonzalez, managing director of multinational accounts at Rosenbluth International, agreed, saying any transaction-fee model, for instance, should be chosen only after it is clear what exactly a transaction is. Other pricing choices would include a cost-plus model or a payroll-plus-transaction-fee model, in which the agency pays the payroll of agents servicing the account and shares the risk.
In regard to the recent phenomenon of unbundled pricing, Mike Woodward, vice president and general manager of the central region at American Express, said there are some benefits to this practice that include a controlling of cost and customization, particularly as the business moves to becoming the cost center. However, the complex process makes more sense for larger companies. Unbundled pricing separates an agency's operating expenses, its core transaction fee and any value-added products, such as special software, unused e-tickets or a 24-hour emergency line.
Cost savings is possible through the increased adoption of online booking, noted Rosenbluth's Gonzalez, which should inspire two different levels of fees--phone and electronic. Self-booking also would reduce the average ticket price, she added.
As the nature of fees continues to shift, it is up to travel managers to educate management on travel's integral role within the corporation, said Pfizer Inc.'s corporate travel manager Connie Bocchieri.
Woodward called upon companies to "rationalize, analyze and demystify" the value proposition.